Monday, March 7, 2011

Seems the Hermes heirs now have a bit of regret of taking their family business public. Via derivatives/equity swaps, Mr. Arnault now owns 17% of Hermes. As Karl Lagerfeld noted, "If you don't want to be taken over, don't put your business in the public market."

What tends to happen with family businesses is that by the third generation the heirs want to cash out or they run the company dry. Hermes happens to have made it to the 6th generation and posted a profit of 421.7 million euros last year.

In the March 5th 2011 NY Times article, Off the Catwalk, The Battle For Hermes, the Hermes Chief Executive notes,

“There is a part of our world that is playing on abundance, on glitz and glamour,” Patrick Thomas, the Hermès’s chief executive, said during an interview the week before Mr. Galliano was fired. “And there is another part that is concentrated on refinement, and basically making beautiful objects.”

Hermès counts itself among the latter, and it wants to stay that way. “We don’t want to be a part of this financial world which is ruining companies and dealing with people like they are goods or raw materials,” said Mr. Thomas, the first chief executive at Hermès who is not a member of the family. “It’s not a financial fight, because we would lose that. It’s a cultural fight.”